State Aid Law and the Middle East Crisis: The European Commission Responds with Remarkable Speed

On 29 April 2026, against the backdrop of the Middle East crisis, the European Commission adopted a new temporary State aid framework: the Middle East Crisis Temporary State Aid Framework (METSAF). In doing so, the European Commission has once again made use of the instrument of a temporary State aid framework, following the COVID-19 pandemic and Russia’s war of aggression against Ukraine.

The framework will remain in force until 31 December 2026 and targets the sectors most severely affected: agriculture, fisheries, transport and energy-intensive industries.

I. Background

The geopolitical tensions in the Middle East and the de facto closure of the Strait of Hormuz have placed significant pressure on the European Union’s energy markets and supply chains in general, while at the same time exposing a structural weakness of the European economy: its continued high dependence on fossil fuels. Against this backdrop, the State aid framework for the “Clean Industrial Deal” (CISAF), introduced last year, has gained additional importance.

As an immediate response to the current crisis situation, the European Commission adopted the temporary State aid framework for the Middle East crisis (METSAF) as part of its “AccelerateEU” package. METSAF specifically expands the Member States’ State aid toolbox by adding a practical and flexible component: it enables economic activities within the EU to be supported efficiently and has deliberately been designed in such a way that support measures can be approved by the European Commission under an accelerated procedure.

II. Necessity of a Temporary State Aid Framework

The European Commission has already relied on the instrument of a temporary State aid framework during major crises in the past: from the 2008 banking crisis, to the COVID-19 pandemic, and Russia’s war of aggression.

The European Commission now argues that these previous crises have demonstrated that swift action and targeted flexibility are of crucial importance in order to minimise negative geo-economic effects on the Union.

III. Affected Sectors

The temporary framework specifically targets those sectors particularly exposed to spikes in energy prices and supply chain disruptions. It covers the primary production of agricultural products (high dependence on fertiliser imports and agricultural fuels), the fisheries and aquaculture sector (vessel fuel prices exceeding the break-even level of the Union fleet), land transport including rail, road and inland waterway transport (diesel price increases of approximately 21% year-on-year with margins of only 2–3%), as well as short-sea shipping within the EU, where disruptions threaten territorial continuity and the supply of island regions.

For the aviation sector, the Commission considers the existing instruments under the General Block Exemption Regulation (GBER) to be sufficient.

IV. Affected Raw Materials

METSAF focuses on three categories of raw materials: crude oil and fuels (including diesel, marine fuel and aviation turbine fuel), natural gas, and fertilisers, in particular nitrogen fertilisers.

Within the Union, prices for nitrogen fertilisers have risen to a level approximately 61% above the 2024 average, as their production requires substantial quantities of natural gas. In addition, the European Commission refers to the announced fertiliser action plan (“RESourceEU”), which is expected to be presented in the second quarter of 2026 and will include both short-term and long-term structural measures.

METSAF also emphasises that temporary relief measures must not undermine the transition to clean energy and that the expansion of renewable energy sources must remain a priority.

V. State Aid Instruments

METSAF provides for a uniform set of instruments across all covered sectors.

Permissible measures include direct grants, tax advantages, advantages relating to other payments, guarantees, loans and equity injections.

As a general rule, the aid may cover up to 70% of the additional costs caused by the crisis in relation to fuel or fertilisers, with the eligible period running from 1 March to 31 December 2026. In the case of aid granted in the form of repayable instruments, the coverage rate may increase to up to 100% of the additional costs, provided that no conversion into grants is envisaged.

Alternatively, Member States may choose a simplified lump-sum approach, whereby the amount of aid is determined on the basis of indicators such as the number of vehicles, fleet size or land area, provided that the individual aid amount does not exceed EUR 50,000 per undertaking.

In addition, temporary amendments to the Clean Industrial State Aid Framework are introduced: the permissible reduction of the average annual wholesale electricity price is increased to 70%, and the possibilities for cumulation with compensation for indirect ETS costs are expanded. Furthermore, Member States may consider temporary reductions in excise duties on fuels pursuant to the Energy Taxation Directive, which are generally exempted under Article 44 GBER. In addition, there is the possibility of subsidising fuel costs for electricity generation from natural gas, although the European Commission has indicated that such measures will be subject to strict case-by-case assessment.

VI. Assessment

With the creation of METSAF, the European Commission has reacted with remarkable speed and is thereby sending a clear signal: in its view, the economic consequences of the Middle East crisis are comparable to those of the COVID-19 pandemic and Russia’s war of aggression against Ukraine.

This assessment is shared, among others, by many companies which are already indicating that medium- to long-term pricing and tender calculations are currently extremely difficult in certain sectors.

It remains to be seen to what extent Germany will make use of METSAF. This is particularly relevant in light of recent statements by the German Federal Minister of Finance, who indicated that not “every crisis and every problem can simply be answered with even more money”.

It will also be interesting to observe developments in public procurement law: will procurement law follow State aid law and – as during the COVID-19 pandemic – provide for the possibility of using price adjustment clauses in order to account for rising prices?